Worcester's self-satisfaction relieves pressure to change

Monday

Oct 7, 2013 at 6:00 AMOct 8, 2013 at 1:21 PM

By Peter S. Cohan, WALL & MAIN

Roberta Schaefer is pleased with Worcester's economy. As president of The Research Bureau, which is financed by Worcester's business establishment, she has spent decades developing policy analysis and information for Worcester's civic leaders. She knows well what is going on in the heart of Massachusetts.

While she would like to see some tax cuts for business, she believes that Worcester has done a much better job than Springfield in making the transition from a manufacturing-based economy. And despite a July 2013 unemployment rate of 9.3 percent — alarmingly higher than Boston's 7.6 percent rate — that sense of comfort removes the pressure to change Worcester's ways.

In an Oct. 1 interview, Ms. Schaefer proudly highlighted Worcester's myriad successes. As she explained, "In our latest survey from last winter, 'Worcester by the Numbers,' 42 percent of all the city's jobs were in education or medicine. Unlike other places, Worcester has made the transition into a post-industrial economy."

She continued, "When I got here in 1976, I thought Worcester would be an education-driven economy, since there were 10 colleges and universities. But I saw that it absolutely was not. By sheer luck, Worcester got UMass Medical School to be built here, starting in 1974. Thanks to that decision, when Worcester's manufacturing economy went into decline, the medical school was able to take up some of the slack."

And this has changed the medical services consumption habits of Worcester residents. According to Ms. Schaefer, "I remember in 1977, when I had my first child, I was asking people where to find a pediatrician and they said they drive 45 miles to Boston. I thought that there had to be local pediatricians and now there are. Moreover, there are great oncologists in Worcester, both at UMass Memorial and St. Vincent (Hospital)."

Worcester has also done a great job of strengthening its educational institutions to serve manufacturing interests. Ms. Schaefer argued, "Worcester Technical High School has made an amazing transformation. As Worcester Vocational Tech, it became a dumping ground starting in the 1970s and by 1995, its building had deteriorated to the point where it faced a choice: Build a regional vocational tech school or put it under the control of the Worcester Public Schools. They chose the latter, and ... in September it was named a 2013 Blue Ribbon School Tuesday by the U.S. Department of Education."

Not everything about Worcester is perfect. According to Ms. Schaefer, "Businesses are deterred by Worcester's dual tax rate."

Many of the most successful Worcester entrepreneurs simply left and started their companies elsewhere. For example, network equipment maker Cabletron Systems, which went public and made its founders very wealthy, was started by Worcester natives, who moved it to New Hampshire. And another Worcester native left town, started Acme Packet, a high-tech company, and sold it in February for $2 billion to Oracle. Why did they leave town?

I have also spoken with many entrepreneurs who comment on Worcester's lack of startup capital and an accessible airport.

But my sense is that Ms. Schaefer's perspective on Worcester's business community reflects the powers that be. And rather than fight that complacency, Worcester-bred entrepreneurs will leave for friendlier climes.

Peter Cohan of Marlboro heads a management consulting and venture capital firm, and teaches business strategy and entrepreneurship at Babson College. His email address is peter@petercohan.com.